Lloyds Banking Group PLC on Wednesday said first quarter profit was up in line with improving income, including interest income, while it backed its annual guidance.

In the three months that ended March 31, the Edinburgh-based bank said pretax profit was £2.26 billion, up 46% from £1.54 billion a year earlier.

Total income was £9.31 billion, swinging from a loss of £2.11 billion, while net interest income rose 18% to £3.43 billion from £2.90 billion. Other income swung to £5.88 billion from a loss of £5.01 billion.

Accounted separately from total income, Lloyds reported a net financial loss regarding insurance and investment contracts of £4.50 billion from a positive income of £6.03 billion. Accounting for this within total income, Lloyds said it rose 23% to £4.81 billion from £3.92 billion.

Customer deposits fell by £2.2 billion to £473.1 billion. This was ‘including a reduction in Retail current account balances of £3.5 billion, partly driven by seasonal customer outflows, including tax payments, higher spend and a more competitive market,’ Lloyds said, noting it was partially offset by deposit increases in Commercial Banking.

Looking ahead, Lloyds backed annual guidance of a banking net interest margin over 305 basis points, and return on tangible equity of around 13%.

The Edinburgh-based bank said asset quality remained resilient, while the portfolio is ‘well-positioned’ in the context of cost of living pressures

‘The group has delivered a solid financial performance in the first quarter of 2023, with strong net income and capital generation, alongside resilient observed asset quality,’ said Chief Executive Officer Charlie Nunn.

‘The macroeconomic outlook remains uncertain. We know that this is challenging for many people. Our purpose driven strategy, alongside our financial strength, means we can continue to support our customers across the country, helping Britain prosper.

‘We are also making good progress on our ambitious plans to transform the group. Our experience over the last year reinforces our belief that continued strategic delivery will create a more sustainable business and deliver increased returns for our shareholders in the medium to longer-term.’

Lloyds shares were down 0.2% to 47.60 pence each in London on Wednesday morning.

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